UPDATE 1-Interest income boosts profit at Russia's Sberbank

MOSCOW, Feb 7 Russian lender Sberbank
reported net profit up 9 percent year on year in January at 31.8
billion roubles ($1.1 billion), according to Russian Accounting
Standards (RAS), on the back of higher interest income.

Sberbank, the RAS results of which are viewed as an
indicator of its quarterly performance under international
reporting standards, said on Thursday that net interest income
rose 19 percent.

The bank, which accounts for about a third of overall
lending in Russia, said that it set aside 11.5 billion roubles
in provisions for possible bad loans, up from 5.5 billion
roubles a year ago. Its non-performing loan ratio was slightly
up at 2.74 percent last month, from 2.69 percent in December.

Despite the improvement to the bottom line, lending was
largely flat in January, both in the corporate and retail
sectors, because of a general trend of weak lending at the start
of the year.

Sberbank said it issued 280 billion roubles in corporate
loans in January but its overall corporate portfolio was down 81
billion roubles as some large borrowers repaid their debts. Its
retail loan portfolio was up 11 billion roubles last month.

Natalia Berezina, an analyst with Uralsib, said the slowdown
in lending and increase in provisions were expected by the
market.

Sberbank shares were down 0.5 percent by 0840 GMT, against a
0.3 percent decline in the MICEX index.

Russia's central bank expects total lending to slow this
year, with corporate lending expected to increase by about 15
percent and retail loans by 25-30 percent this year because of a
decline in banks' capital adequacy and lacklustre economic
growth.

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